About Forecasting Process Design

Forecasting process design is a way of evaluating the numerous forecasting options available to you. It consists of questions that assist you with requirements gathering and help you to design a streamlined, reliable, and timely forecasting process.

The questions asked during this process are:

Who forecasts?

To determine who forecasts, compile a list of the major participants in the forecasting process. These participants may include account managers, regional or geographic sales professionals, product specialists, industry specialists, overlay sales representatives, and sales managers. Each group is likely to have a different set of requirements. You may select one forecasting approach for one group, and a different forecasting approach for another group.

In some companies, the district managers create a forecast and roll it up to their managers with a committed monthly total for the sales representative. The product specialists and overlay sales representatives may rely on a less formal process by querying against the All Revenues list view to find the information they are looking for, and then using a report, a chart, or exporting to Microsoft Excel to collaborate or capture the information for later use.

Why do they forecast?

Understanding the overriding goals, principles, and objectives behind a forecast is critical. These objectives may vary from one group to another. For instance, the sales department might want to identify potential lags in revenue to redeploy resources faster. Manufacturing might want to avoid production bottlenecks by adequately predicting demand. Professional services might need to use their internal resources more efficiently. Product management might want to provide directors with visibility into the sales pipeline to better drive product specific sales.

Once you clarify the goals of the various forecasting constituents, select an approach that works for each group. In general, use the simplest, most straight-forward option that meets the objectives of each group. Sometimes, a single approach works for everyone; often, several approaches are needed.

What kind of information is required?

The information requirements in sales are often very different from the information requirements in manufacturing and accounting. While it is useful to have the right level of detail, too much information can be overwhelming. Typically, sales organizations focus on total revenues for each representative, or opportunity, partner, or account specific revenues. Accounting and manufacturing usually want more detail; they need to know how much of product X was booked last quarter, or how much of product Y is being shipped this quarter.

Each organization will have access to the appropriate level of information. You might set up a revenue query for sales which shows only opportunity or account specific information, while setting up a more detailed query for manufacturing that provides users with details on each of the products within a given product line. Apply this same line of logic to the design of your forecast search specifications, so that they pull in the right level of information for the users involved.

How often is the information needed?

While a weekly forecast is fine for some organizations, a monthly forecast is better for others. The Revenues screen allows a sales professional, partner manager, sales manager, or executive to retrieve information in real time, while the Forecasts screen provides users with a way of copying a set of revenues and saving it for future use.

Find a balance between a more structured, scheduled forecasting process, and a less structured, less scheduled forecasting process. With the charts and reports available in the Revenues screen, you can perform an analysis without ever creating a forecast. You can reserve the forecasting process for organizations that really need a snapshot of the information at appropriate points in time.

Is management intervention and adjustment required in forecasting?

In many organizations, a snapshot of the information in the Revenues screen, with some criteria applied to filter out extraneous records, is a sufficient forecasting method. In other organizations, some level of management intervention and adjustment is required as the forecast rolls up to management and executive levels.

In general, it is best to streamline the forecasting process. With fewer intermediaries and adjustments, the forecasting process becomes more timely and less cumbersome. Where possible, the manager and the sales representative should agree on the revenue amount, the close date, the win probability, and the commit status in the Revenues screen, so that the manager does not need to intervene in the forecasting process. This allows an organization to take one snapshot of the information without intermediate steps as the forecast rolls up the management chain. It also confirms a level of agreement between the sales representative and the manager, so that the queries in the Revenues screen accurately reflect the level of anticipated business.

Do sales representatives need to adjust their total dollars forecasted?

Often, the total dollar amount that a sales representative forecasts is equal to the sum total of his or her forecastable revenues, on a monthly or quarterly basis. In these cases, running a query in the revenue list view, or running a snapshot of the revenues for forecasting purposes is enough to produce a corporate forecast. However, there are organizations in which sales professionals are expected to commit to a monthly or quarterly revenue amount that does not equal the sum of their forecasted opportunities.

For example, a sales representative wants to include $100,000 worth of opportunities in a forecast, even though the representative is only willing to commit to $50,000 in revenue. The Forecasts screen allows the sales representative to include $100,000 in opportunities, while adjusting the total revenue amount on a monthly or quarterly basis to $50,000. Although this can be useful in some situations, it means that the value of the revenues and the value of what the sales representative is willing to forecast do not agree.

NOTE: Siebel Forecasting allows sales team members to enter negative integers in their forecasts.